The world's biggest economy keeps getting bigger

Published online: Mar 25, 2013

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Dr. Lowell Catlett is Regents Professor in Agricultural Economics and Agricultural Business and Extension Economics and Dean of College of Agriculture, Consumer and Environmental Sciences at New Mexico State University.

This is the land grant university in New Mexico, and Catlett says while agriculture in the southwest is different from the Midwest in many ways, they have seen the dairy industry become a big player in the state.

As an economist, Catlett is very optimistic about the economic future of the United States.

"I look at history and history says don't bet against us." He stresses we should not let "all of the noise" get in the way of really seeing what has happened to our economy. "Other than the last recession, we've not had a drop in Gross Domestic Product since the Great Depression."

He says if you read history, "The trajectory of the U.S. economy is always up." Yes, challenges do arise, the gasoline crisis of the 1970s, Japan's projected dominance of the world economy in the 1980s, $100 per barrel oil, "we adjust because we are creative and in the process the economy grows."

He says we did learn a great deal from the economic collapse of 2007-2008 mainly in the housing industry which was the main player in that collapse. "But, sometimes memories are short; we went through the same thing with the Savings & Loan crisis before that so about every 20 years we have to learn it over again."

Some have charged that international free trade agreements are pulling economies down more than bringing others up. Specifically the loss of manufacturing jobs in the U.S. to countries with cheaper labor and lower environmental standards. Catlett says there is no doubt we have lost manufacturing jobs like electronics and textiles but we have gained in new areas and technologies.

"We manufacture more things in America today than at any time in history, we're just not doing some of the things that other countries can do better than us.but we're pretty good as some things too!" He points to the fact "American businesses last year reported the largest profits they ever reported in history. They're sitting on the largest cash reserves they've ever had in history, lowest debt-to-equity ratios. These are world-class companies setting on the best financial news they've ever had in history."

Despite the drought, agriculture has enjoyed three of the best years ever and Catlett is optimistic this can continue. Cash grain prices are currently high and could go higher if it doesn't rain and could fall-out-of-bed if it does but that too will be something the industry will adjust to. On the global side, per capita income continues to increase across the globe and as people get more money they want better, safer food and that plays right into the U.S.'s hand.